Does Eni S.p.A.'s (BIT:ENI) CEO Pay Matter?

Claudio Descalzi became the CEO of Eni S.p.A. (BIT:ENI) in 2017. First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Eni

How Does Claudio Descalzi's Compensation Compare With Similar Sized Companies?

Our data indicates that Eni S.p.A. is worth €47b, and total annual CEO compensation was reported as €6.5m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €1.6m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We took a group of companies with market capitalizations over €7.3b, and calculated the median CEO total compensation to be €3.3m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

As you can see, Claudio Descalzi is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Eni S.p.A. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Eni has changed from year to year.

Is Eni S.p.A. Growing?

Over the last three years Eni S.p.A. has grown its earnings per share (EPS) by an average of 81% per year (using a line of best fit). In the last year, its revenue changed by just 0.2%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Revenue growth is a real positive for growth, but ultimately profits are more important. It could be important to check this free visual depiction of what analysts expect for the future.

Has Eni S.p.A. Been A Good Investment?

Eni S.p.A. has not done too badly by shareholders, with a total return of 8.3%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

We compared the total CEO remuneration paid by Eni S.p.A., and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.

However, the earnings per share growth over three years is certainly impressive. We also think investors are doing ok, over the same time period. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we'd recommend further research on management. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Eni.

Important note: Eni may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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